- American Opportunity Tax Credit (AOC)
- The Lifetime Learning Credit
- Deduction for Student Loan Interest
The lifetime learning credit, or LLC, is a tax break for taxpayers with education expenses during the year. This mostly covers tuition but includes other fees and costs you have to pay in order to enroll in a class or program, as long as you pay those costs directly to the school or program administrator.
Unlike other education tax credits, the LLC covers the cost of classes that help you to improve your job skills or learn new job skills. You do not need to be in a degree program to claim the LLC. However, most accredited postsecondary institutions do qualify. The lifetime learning credit also covers your expenses for career development classes and other classes to learn or improve your job skills.
The lifetime learning credit is worth a maximum of $2,000 per tax return but you need to have at least $10,000 of expenses to be eligible for the full deduction ($20,000 if you file a joint tax return). You also need to fall within the income limits to claim this credit. For 2020, your income must be $69,000 or less ($138,000 for joint filers) to claim even a partial credit, up from $68,000 ($136,000 for joint filers) in 2019.
Qualifying expenses include tuition and fees you are required to pay in order to enroll in a course or program.
Your exact credit is calculated as 20% of your first $10,000 of qualified education expenses, which means you need to spend at least $10,000 ($20,000 for joint filers) on eligible expenses in order to get the full LLC.
The lifetime learning credit is not a refundable tax credit. So if the credit brings the amount of tax you owe for the year below $0, you will not get a refund for the excess credit. For example, if you owe $1,000 of income tax for the year and then you qualify for a $1,500 credit, you simply owe nothing and will not get a refund for the extra $500.
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